As of 2020, over a third of Oregonians lack retirement savings plans at work, and nearly 1 out of every 5 seniors in Oregon relies on Social Security alone. Given the increasing cost of living, the need for more robust retirement savings options for Oregon workers is clear.

To bridge the gap, Oregon passed legislation that established a dedicated, state-run retirement program designed for businesses and their employees to build long-term savings. OregonSaves provides an easy and automatic way for Oregonians to save for their future.

In this article, we’ll answer some questions you may have about OregonSaves and explain how it affects Oregon businesses.

How Does OregonSaves Work?

OregonSaves is a government-sponsored retirement plan that launched in 2017. Since its inception, Oregon employers who meet certain criteria are required by law to offer a qualified, employer-sponsored retirement plan or enroll their employees in the program.

Oregon employees will contribute to the program through automatic deductions from their paychecks into a Roth individual savings account (Roth IRA) unless they choose to opt out. The money in the account will grow tax-free, and employees won't have to pay income tax on any money they withdraw from their account during retirement. The default savings rate begins at 5% and increases by 1% annually up to 10%, but each individual can elect a higher or lower percentage.

The program is overseen by the Oregon Retirement Savings Board.

Which Businesses are Affected?

According to the OregonSaves website, all Oregon businesses, regardless of size, must facilitate the OregonSaves retirement program unless they already offer a qualified, employer-sponsored retirement plan.

Registration Deadline

Existing businesses should have already registered for OregonSaves. Newly eligible businesses will receive a notification that they are required to sign up for the program. Employers who already offer a qualified plan or choose to start one can certify their exemption from the program.

Penalties

Employers who fail to comply may be subject to penalties and fines.

Who is Eligible to Save With the OregonSaves Program?

Most individuals who are 18 years or older and have earned wages in Oregon are eligible to participate in OregonSaves.

The program is voluntary for employees, and they can change their contribution amount or opt out at any time.

Conclusion

Since its launch, OregonSaves has made a notable impact on retirement savings for Oregon workers. With automatic enrollment and contributions made directly through payroll deductions, it simplifies the process of setting aside funds for retirement.

The OregonSaves program requires registered businesses with any number of employees to either participate in the program or certify an exemption, so it’s important for Oregon employers to familiarize themselves with the program details and requirements.